latest-news-headlines Market Intelligence /marketintelligence/en/news-insights/latest-news-headlines/calif-regulators-hold-the-line-on-greenhouse-gas-reduction-levels-for-utilities-57777215 content
Log in to other products

Login to Market Intelligence Platform


Looking for more?

Contact Us

Request a Demo

You're one step closer to unlocking our suite of comprehensive and robust tools.

Fill out the form so we can connect you to the right person.

If your company has a current subscription with S&P Global Market Intelligence, you can register as a new user for access to the platform(s) covered by your license at Market Intelligence platform or S&P Capital IQ.

  • First Name*
  • Last Name*
  • Business Email *
  • Phone *
  • Company Name *
  • City *
  • We generated a verification code for you

  • Enter verification Code here*

* Required

In This List

Calif. regulators hold the line on greenhouse gas reduction levels for utilities


S&P podcast - Coronavirus pandemic, oil price crash shake up energy sector

Case Study: A Utility Company Efficiently Sharpens Its Focus on the Credit Risk of New Customers

Energy Evolution Podcast

Energy Evolution Why solar energy could get even cheaper

Calif. regulators hold the line on greenhouse gas reduction levels for utilities

The California Public Utilities Commission on March 26 decided not to revise the greenhouse gas emissions reduction goal it adopted in 2018 for utilities and other load-serving entities to use when planning to meet their energy requirements over the following decade.

Accordingly, they will have to continue planning so as to reduce their combined greenhouse gas emissions levels to 46 million metric tons, or MMT, annually by 2030 instead of adopting the lower targets that environmental and clean energy advocates wanted.

Even so, the decision will require utilities to double the amount of renewable generation and storage capacity they now have over the next 10 years by installing nearly 25,000 MW of additional clean resources, which PUC President Marybel Batjer noted will be "no small feat."

The commissioners adopted the current greenhouse gas emissions reduction goal about two years ago when they first established a "reference system portfolio." The agency indirectly set the requirement by approving a new reference system portfolio of resources that would include 8,900 MW of new battery storage, or roughly eight times the total installed battery capacity that existed nationwide in 2018. It also calls for about 11,000 MW of utility-scale solar and 3,400 MW of wind. Utilities must use this reference when preparing their integrated resource plans every two years so that in aggregate they meet the requirements.

The reference portfolio would require an aggregate investment of $45.7 billion annually, according to Commissioner Liane Randolph, who presided over the most recent proceeding.

Achieving the emissions target will require a reduction of about 56% below 2000 levels for electric utilities, which will require them to shoulder a greater burden than other sectors in meeting the state's overall policy to reduce greenhouse gas emissions 40% below 1990 levels by 2030.

The PUC will use its reference portfolio to review the individual plans investor-owned utilities, community choice aggregators and other electric service providers are required to submit for approval.

Lower targets at more expense sought

In response to calls for lower targets, the PUC also decided to require the load-serving entities to submit alternative plans for a greenhouse gas emissions target of 38 MMT by 2030. Some parties wanted the target reduced to 30 MMT by 2030, which would require utilities to spend billions of dollars more to achieve, Randolph said.

Rather than saddling utility ratepayers with even higher bills, Randolph said California should address deeper carbon reductions for utilities at an economy-wide level and socialize those costs across other sectors as well. Electric utilities are being called upon to assume roles in decarbonizing buildings and fueling electric vehicles, she noted.

While the commissioners unanimously voted for the 46 MMT reference portfolio, Commissioner Martha Guzman Aceves said she believes utilities must reach 30 MMT if California is to achieve its overall greenhouse gas target. She also called for accelerated efforts to eliminate natural gas generation and retire the great amount of pipeline and storage infrastructure needed to fuel it.

The Sierra Club said the PUC's ruling allows existing gas-fired plants to continue polluting and does not go far enough to meet the state's climate and air quality goals. However, the group called the requirement for load-serving entities to prepare additional plans to meet a 38 MMT target "a major win."

In other actions, the commissioners approved spending of $200 million over four years for two programs to help move customers from natural gas to electric service in order to advance building decarbonization. The money will come from the revenue generated from greenhouse gas emissions allowances directly allocated to gas corporations and consigned to auction as part of the state's cap-and-trade program.

Edison International subsidiary Southern California Edison Co. was selected to act as a contracting agent for managing solicitation of a third-party implementer to accelerate market development and adoption of building decarbonization strategies under the Technology and Equipment for Clean Heating, or TECH, Initiative.

Funding also was approved for the Building Initiative for Low-Emissions Development, or BUILD, Program to provide assistance for making new residential housing building projects all electric with no hookup to the gas distribution grid.

Those two pilot programs are designed to help spur development of a market to decarbonize residential buildings in order to achieve California's zero-emission buildings goals, the PUC said.